Is solar worth it in Minnesota in 2026?

How Minnesota pays for your solar power

Net metering at the retail rate. Minnesota law lets systems under 40 kW elect credit at the utility's average retail energy rate; Xcel Energy applies it to monthly excess generation.

In the calculator, 40% of your solar output is used at home at the retail price and the rest is exported at about 100% of retail (our default for this kind of rule), so each solar kWh is worth 100% of the retail price on average. Change it if your utility pays more or less. Method

State or utility incentive	What it is worth
Xcel Energy Solar*Rewards (residential production payment)	Per-kWh payment on metered solar output for 10 years, on top of net metering; first-come, first-served funding, systems up to 20 kW
State sales tax exemption on solar energy systems	Exempt from Minnesota sales tax (Minn. Stat. 297A.67, subd. 29)
Property tax exemption for solar energy generating systems	Personal property of the system is exempt (Minn. Stat. 272.02, subd. 24)

How exports are credited

The rule sits in Minn. Stat. 216B.164, which treats rooftop solar as a “qualifying facility” and sets what the utility pays for power the customer sends to the grid. The Public Utilities Commission oversees investor-owned utilities. Cooperatives and municipal utilities have more room to set their own procedures.

For systems under 40 kW, the customer may elect to be paid for net excess generation at the “average retail utility energy rate.” The statute defines that as the average of the utility’s retail energy rates for that customer class. It covers the energy charge only, so fixed monthly charges are not offset. Systems from 40 kW up to 1,000 kW served by a public utility can elect a kilowatt-hour credit carried forward on the bill, with any balance left at the end of the calendar year paid at the applicable rate.

Xcel Energy, the largest utility in the state, files this in its Minnesota rate book as rate code A50 for non-time-of-day customers under 40 kW AC. Excess energy is measured over each monthly billing period. The rate-book sheets opened for this page carry 2020 effective dates, so the current per-kWh figure should be checked on Xcel’s bill or tariff page before relying on it. For cooperatives and municipal utilities, the statute lets the customer choose between avoided-cost compensation, the average retail energy rate, or a kWh credit that expires at the end of the calendar year with no payment. Which options a given co-op offers is worth confirming with that co-op.

Public utilities may not impose a standby charge on a net metered or qualifying facility of 100 kW or less. The statute also allows a utility to offer a value-of-solar tariff, paid at the same rate for each kWh generated over a term of at least 20 years. That is an alternative to net metering, not a default.

State incentives in 2026

• Xcel Energy Solar*Rewards. A performance-based incentive paid per kWh of metered solar production for 10 years, on top of the net metering treatment. Xcel’s program FAQ limits residential systems to 20 kW and requires expected annual output no higher than 120% of the home’s prior 12 months of use. Funding is limited and goes to applicants in order; applications must be approved before installation. The per-kWh rate and remaining budget for 2026 could not be confirmed on Xcel’s own page, which did not load for this review. Installer sites report different rates, so the current figure should be confirmed with Xcel directly. An income-qualified track exists with a separate budget and a reported waitlist.
• Sales tax exemption. Minn. Stat. 297A.67, subd. 29 exempts a solar energy system, as defined in section 216C.06, from sales tax.
• Property tax exemption. Minn. Stat. 272.02, subd. 24 exempts personal property consisting of solar energy generating systems from property tax. A separate production tax applies to larger utility-scale installations, not to a typical home system.

The federal residential solar credit (Section 25D) ended for systems installed after 31 December 2025, so none of the above is federal.

What it means for payback

Crediting excess at the average retail energy rate keeps the value of exported power fairly close to what a kWh costs to buy, though fixed charges are never offset. Minnesota winters mean low output from December to February and higher output in summer, and the credit is applied month by month, so a large summer surplus is paid out in cash rather than banked toward winter bills. Sizing the system near annual use, rather than well above it, avoids relying on the export rate. The production payment from SolarRewards and the two tax exemptions lower the upfront price or add income, but the SolarRewards money depends on funding being available when the application is filed.

Other rules worth knowing

Minn. Stat. 500.30 lets a property owner create a recorded solar easement to protect a system’s exposure to sunlight, written and filed with the county recorder. Interconnection charges are assessed by Xcel case by case under its tariff, and municipal and cooperative customers can face different rules from Xcel customers.

Berkeley Lab does not publish a Minnesota median from enough systems, so the calculator starts from the U.S. median of $3.60/W. Put your own quote in.